After Hindenburg released its report on the Adani Group, Asia’s richest man, Gautam Adani slipped from 3rd position to 8th, in the list of the world’s richest people.
But what is there in the Hindenburg report that has led to a sharp decline in the wealth of Gautam Adani?
Before we get into the decline of Adani’s stock, let’s first see the growth graph of Gautam Adani’s income. And how he became India’s and Asia’s richest person and joined the list of the world’s richest people.
In the last 3 years, Gautam Adani and his business empire have experienced a significant increase in its net worth. Earlier, Mukesh Ambani was the richest person in India but in 2022, Gautam Adani became the richest person not only in India but in the entire Asia.
As per the reports by Business Insider, the net worth of Gautam Adani saw a significant rise despite the Covid Lockdown. In 2021, he was on the 14th position in the list of the world’s richest people but in 2022, he stood at the 3rd position just after Bernard Arnault and Elon Musk.
Reasons Behind The Sudden Jump
The companies like Adani Enterprise, Adani Transmission, Adani Wilmar, Adani Green Energy, Adani Total Gas, Adani Power and Special Economic Zone come under the umbrella of Adani Group. These companies witnessed huge profits.
Moreover, the shares of the Adani Group also played a crucial role in adding to the wealth of Gautam Adani.
Also Read: Reasons Behind The Strategic Rise Of Gautam Adani
What Is Published In The Hindenburg Report?
Adani’s net worth has slipped from 3rd to 8th position after the release of a report from Hindenburg Research titled “Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History.“ According to the report, Adani Group had “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades”.
Published on 24th January 2023, the report claims that Adani Group moved up the stock prices of its seven key listed companies by over-evaluating the price. And this over-evaluation of the stock prices helped Adani’s net worth to increase by over $100 billion in the last three years. The stock prices of Adani Group spiked by 819% which seems to be very unnatural.
The research firm has been conducting this investigation for two years. Several people were interviewed for the research, including former Adani Group senior executives & many documents were examined.
“Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its seven key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” mentioned the report.
The report also raised questions on Gautam Adani’s elder brother, Vinod Adani and called him an “elusive figure” who has regularly been found at the centre of the government’s investigations.
The research firm has identified 38 Mauritius shell entities controlled by Vinod or close associates. No obvious signs of operations, including no reported employees, no independent addresses or contact numbers and no meaningful online presence have been found of the Vinod Adani-associated entities. To quote, “Despite this, they have collectively moved billions of dollars into Indian Adani publicly listed and private entities, often without required disclosure of the related party nature of the deals,” mentioned the Hindenburg report.
Founded by Nathan (Nate) Anderson in 2017, Hindenburg is a New York-based forensic financial research company that analyses the accounting irregularities of companies. This is not the first time that this company is releasing its report on a well-known conglomerate or institution. The company has also published reports on Twitter as well.
Adani Group’s Take On The Report
Adani Group has stated that these claims are baseless and are being made just to spoil the reputation of the company. The billionaire industrialist may also file a lawsuit against US-based Hindenburg. (After being threatened with a lawsuit, Hindenburg tweeted, “we fully stand by our report and believe any legal action taken against us would be meritless”.)
The CFO of Adani Group, Jugeshinder Singh said that the conglomerate was ‘shocked’ about this research report by Hindenburg and termed it a “malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts”.
Adani Group’s detailed response to Hindenburg’s Unsubstantiated Accusationshttps://t.co/byWV8z9q6O
— Adani Group (@AdaniOnline) January 29, 2023
On January 29th, Adani Group gave a written detailed response to Hindenburg’s Accusations. It said, “This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India.”
Is It An Attempt To Defame?
Commenting on the report, the Adani group’s legal head said, “We are deeply disturbed by this intentional and reckless attempt by a foreign entity to mislead the investor community and the general public, undermine the goodwill and reputation of the Adani Group and its leaders, and sabotage the FPO (Follow-on Public Offering) from Adani Enterprises.”
Hindenburg report was published (January 24, 2023) a few days prior to the launch of Adani Enterprises’ biggest FPO (January 26, 2023) ever in India. In recent updates, Adani Enterprises has withdrawn its $2.5 billion share sale to insulate investors from potential losses.
Gautam Adani while addressing the investors after the FPO withdrawal said, “After a fully subscribed FPO, yesterday’s decision of its withdrawal would have surprised many. But considering the volatility of the market seen yesterday, our board strongly felt that it wouldn’t have been morally correct to proceed with FPO.”
He also mentioned, “For me, the interest of my investors is paramount and everything is secondary. Hence to insulate investors from potential losses we have withdrawn FPO.”
Now, only the future can tell whether the claims in the reports are true or if it is just an attempt to defame the reputation of The Adani Group.